The zinger corporation is considering an investment that has the following data:

Shields Company has gathered the following data on a proposed investment project: (Ignore income taxes in this problem.)

Investment required in equipment

$680,000

Annual cash inflows

$66,000

Salvage value

$0

Life of the investment

20 years

Required rate of return

7%

The company uses straight-line depreciation. Assume cash flows occur uniformly throughout a year except for the initial investment.

The payback period for the investment is closest to:

0.1 years

1.0 years

8.3 years

10.3 years

(Ignore income taxes in this problem.) The management of Helberg Corporation is considering a project that would require an investment of $291,000 and would last for 6 years. The annual net operating income from the project would be $139,000, which includes depreciation of $18,000. The scrap value of the project's assets at the end of the project would be $19,900. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:

1.9 years

2.1 years

1.6 years

1.8 years

The management of Londo Corporation is investigating buying a small used aircraft to use in making airborne inspections of its above-ground pipelines. The aircraft would have a useful life of 6 years. The company uses a discount rate of 20% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is −$474,840. (Ignore income taxes in this problem)

How large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive? (Round discount factor(s) to 3 decimal places and final answer to the nearest dollar amount.)

$474,840

$142,766

$79,140

$94,968

The management of Urbine Corporation is considering the purchase of a machine that would cost $410,000 would last for 7 years, and would have no salvage value. The machine would reduce labor and other costs by $67,000 per year. The company requires a minimum pretax return of 7% on all investment projects. (Ignore income taxes in this problem.)

The net present value of the proposed project is closest to: (Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)

−$48,937

−$8,937

−$73,857

−$24,017

(Ignore income taxes in this problem.) The management of Stanforth Corporation is investigating automating a process. Old equipment, with a current salvage value of $12,000, would be replaced by a new machine. The new machine would be purchased for $402,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $139,000 per year in cash operating costs. The simple rate of return on the investment is closest to:

18.5%

17.9%

34.6%

16.7%

(Ignore income taxes in this problem.) Dube Corporation is considering the following three investment projects:

Project D

Project E

Project F

Investment required

$12,400

$55,000

$100,000

Present value of cash inflows

$14,830

$78,950

$117,160

The profitability index of investment project E is closest to:

0.44

1.44

0.56

0.30

(Ignore income taxes in this problem.) Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $31,000 and will have a 6-year useful life and a $4,300 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $32,300 per year. The cost of these prescriptions to the pharmacy will be about $25,600 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to:

4.6 years

4 years

5.3 years

3.8 years

(Ignore income taxes in this problem.) Neighbors Corporation is considering a project that would require an investment of $324,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows:

Sales

$200,000

Variable expenses

27,000

Contribution margin

173,000

Fixed expenses:

Salaries

34,000

Rents

47,000

Depreciation

42,000

Total fixed expenses

123,000

Net operating income

$50,000

The scrap value of the project's assets at the end of the project would be $24,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to

3.5 years

6.5 years

5.0 years

3.3 years

Blaine Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $200,000 and would have a sixteen-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $30,000 per year to operate and maintain, but would save $62,000 per year in labor and other costs. The old machine can be sold now for scrap for $20,000. The simple rate of return on the new machine is closest to: (Ignore income taxes in this problem.)

9.75%

31.00%

21.67%

10.83%

(Ignore income taxes in this problem.) The Zinger Corporation is considering an investment that has the following data:

Year 1

Year 2

Year 3

Year 4

Year 5

Investment

$12,000

$3,800

Cash inflow

$2,800

$2,800

$8,700

$4,800

$4,800

Cash inflows occur evenly throughout the year. The payback period for this investment is: (Round your answer to 1 decimal place)

3 years

3.3 years

4 years

4.3 years

(Ignore income taxes in this problem.) Assume you can invest money at a 14% rate of return. How much money must be invested now in order to be able to withdraw $5,000 from this investment at the end of each year for 8 years, the first withdrawal occurring one year from now?

$24,840

$23,195

$21,440

$1,755

The present value of a cash flow will never be less than the future dollar amount of the cash flow.

True

False

(Ignore income taxes in this problem.) James just received an $8,000 inheritance check from the estate of his deceased rich uncle. James wants to set aside enough money to pay for a trip in five years. If the trip is expected to cost $5,000, how much of the $8,000 must James deposit now if the rate of return is 12% per year in order to have the $5,000 in five years?

$2,535

$2,835

$2,000

$5,000

(Ignore income taxes in this problem.) How much would you have to invest today in the bank at an interest rate of 5% to have an annuity of $1,400 per year for 5 years, with nothing left in the bank at the end of the 5 years? Select the amount below that is closest to your answer.

$6,667

$6,061

$7,000

$1,098

(Ignore income taxes in this problem.) You have deposited $16,700 in a special account that has a guaranteed rate of return of 11% per year. If you are willing to completely exhaust the account, what is the maximum amount that you could withdraw at the end of each of the next 6 years? Select the amount below that is closest to your answer.

$3,465

$3,089

$2,783

$3,947

Lucas Company recorded the following events last year:

Repurchase by Lucas of its own common stock

$44,000

Sale of long-term investment

$63,000

Interest paid to lenders

$17,000

Dividends paid to the company's shareholders

$73,000

Collection by Lucas of a loan made to another company

$49,000

Payment of taxes to governmental bodies

$27,000

On the statement of cash flows, some of these events are classified as operating activities, some are classified as investing activities, and some are classified as financing activities.

Based solely on the information above, the net cash provided by (used in) investing activities on the statement of cash flows would be:

$39,000

$(7,000)

$(22,000)

$112,000

Ansbro Corporation's most recent balance sheet appears below:

Ansbro Corporation Comparative Balance Sheet

Ending Balance

Beginning Balance

Assets:

Cash and cash equivalents

$99

$44

Accounts receivable

56

59

Inventory

76

111

Property, plant and equipment

646

555

Less: accumulated depreciation

254

229

Total assets

$623

$540

Liabilities and stockholders' equity:

Accounts payable

$64

$73

Accrued liabilities

40

39

Income taxes payable

27

51

Bonds payable

252

223

Common stock

98

92

Retained earnings

142

62

Total liabilities and stockholders' equity

$623

$540

Net income for the year was $106. Cash dividends were $26. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows

The net cash provided by (used in) operating activities for the year was:

$137

$97

$169

−$31

Financial statements of Ansbro Corporation follow:

Ansbro Corporation Comparative Balance Sheet

Ending Balance

Beginning Balance

Assets:

Cash and cash equivalents

$33

$30

Accounts receivable

84

81

Inventory

43

40

Property, plant and equipment

663

570

Less: accumulated depreciation

348

308

Total assets

$475

$413

Liabilities and stockholders' equity:

Accounts payable

$63

$70

Bonds payable

140

200

Common stock

95

81

Retained earnings

177

62

Total liabilities and stockholders' equity

$475

$413

Income Statement

Sales

$750

Cost of goods sold

403

Gross margin

347

Selling and administrative expenses

134

Net operating income

213

Income taxes

78

Net income

$135

Cash dividends were $20. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows

the net cash provided by (used in) investing activities for the year was:

$(93)

$(20)

$(60)

$14

Boole Corporation's net cash provided by operating activities was $140; its capital expenditures were $71; and its cash dividends were $30. The company's free cash flow was:

$69

$241

$110

$39

Megan Corporation's net income last year was $100,000. Changes in the company's balance sheet accounts for the year appear below:

Increases (Decreases)

Asset and Contra-Asset Accounts:

Cash

$(4,600)

Accounts receivable

$(16,000)

Inventory

$4,000

Prepaid expenses

$(8,400)

Long-term investments

$82,000

Property, plant and equipment

$59,000

Accumulated depreciation

$62,000

Liability and Equity Accounts:

Accounts payable

$0

Accrued liabilities

$16,600

Income taxes payable

$(12,000)

Bonds payable

$(33,000)

Common stock

$22,000

Retained earnings

$60,400

The company paid a cash dividend of $39,600 and it did not dispose of any long-term investments or property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows.

The free cash flow for the year was:

$128,000

$88,400

$147,400

$281,000

Salsedo Corporation's balance sheet and income statement appear below: icture icture Cash dividends were $9. The company sold equipment for $15 that was originally purchased for $10 and that had accumulated depreciation of $5. It did not issue any bonds payable or repurchase any of its own common stock.

The net cash provided by (used in) financing activities for the year was:

$(9)

$(15)

$(21)

$3

The data given below are from the accounting records of the Kuhn Corporation: icture

Based on this information, the net cash provided by operating activities using the indirect method would be:

$55,000

$58,000

$50,000

$60,000

Adah Corporation prepares its statement of cash flows using the indirect method. Which of the following would be subtracted from net income in the operating activities section of the statement? icture

Option A

Option B

Option C

Option D

Financial statements of Rukavina Corporation follow: icture icture

Cash dividends were $8. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following question pertain to the company's statement of cash flows.

The net cash provided by (used in) investing activities for the year was:

$26

$15

$(26)

$(15)

Shoshoni Corporation prepares its statement of cash flows using the indirect method. Which of the following would be added to net income in the operating activities section of the statement? icture

Option A

Option B

Option C

Option D

investing activities on the statement of cash flows generate cash inflows and outflows related to borrowing from and repaying principal to creditors and completing transactions with the company's owners such as selling or repurchasing shares of common stocks and paying dividends.

True

False

The direct method of preparing the statement of cash flows will show the same increase or decrease in cash as the indirect method.

True

False

In a statement of cash flows, issuing bonds payable affects the:

operating activities section.

financing activities section.

investing activities section.

free cash flow activities section.

Randal Corporation recorded the following activity for the year just ended: icture

The net cash provided by financing activities for the year was:

$100,000

$550,000

$180,000

$680,000

Krech Corporation's comparative balance sheet appears below: icture

The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities.

The company's net cash provided by operating activities is:

$29,000

$19,000

$27,000

$21,000